Alcoa’s Kwinana alumina refinery on Wednesday, February 28, 2024 in Kwinana, Australia. U.S. aluminum producer Alcoa has made a $2.2 billion offer to acquire its Australian joint venture partner Alumina Ltd., as it seeks to consolidate ownership of key upstream assets with a long-term partner. Long-term demand for metals is expected to rise.
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Alcoa Will buy Alumina The all-stock deal values the Australian company at $2.2 billion and makes the US company one of the world’s largest producers of alumina and bauxite.
Alumina shares rose 10.4% after Alcoa announced the deal on Monday, hitting its highest level since August 2023. Alcoa shares rose 2.1% to $30.5 a share.
Alcoa’s push to acquire its joint venture partner could be seen as a gamble on metals, which will be an important part of the transition to clean energy.
The alumina purchase gives Alcoa full control of its joint venture, one of the world’s largest producers of semi-processed aluminum. Aluminum is used in the production of renewable infrastructure and electric vehicles.
The global mining industry has seen a surge of merger and acquisition activity recently, despite growing concerns about the economic outlook in China, one of the world’s largest buyers of metals, and a slowdown in U.S. electric vehicle sales.
“This could be a win-win for both companies,” said Tim Waterer, chief market analyst at trading firm KCM Trade.
“While the growth prospects for the sector are cloudy, the takeover bid can be seen as a vote of confidence in the resources sector.”
Buyout is as follows United States Steel Corporation US$14.9 billion acquisition of Japan Nippon Steel and Newmont’s Acquired Australian gold mining company Newcrest for US$15 billion.
Upon completion of the transaction, Alumina shareholders will own approximately 31.6% of the combined entity, while Alcoa shareholders will own 68.4%.
In the absence of a better proposal, Alumina’s board of directors, including its managing director and chief executive, recommended shareholders vote in favor of the deal.
A few months ago, Alcoa’s bauxite operations in Australia faced operational and license-related issues. The company also revealed in January that it planned to halt production at its Kwinana alumina plant in Western Australia to control costs.
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